Tuesday, October 7, 2008
Summary of Amritt Webinar: Doing Business in India
I just got off a conference call with Amritt Ventures, an business consultant company for Western companies trying to tap and better understand the Indian market. I found the insights very interesting and took some notes that I thought I’d share:
The speaker was Gunjan Bagla, author of Doing Business in 21st Century India, a consultant for American companies for 25 years, and graduate of the famous IIT in India, and he provided some valuable insights on the Indian mentality and India’s prospective future.
He mentioned a Morgan Stanley study done in 2006 of the last 100 years on the liberalization of various countries (Japan’s liberalization in the 1940-50s, Phillipines in the 1980s, etc.). In each instance after liberalization, the country’s GDP assumed an S-curve formation (rapid exponential growth followed by a gradual tapering, much like an industrialized country). India, in terms of GDP, is still at the bottom of its S-curve formation.
He did mention some grave problems that India has that is currently stunting its growth like rampant disease, poverty (60% of citizens live on less than $2 a day), and immense government bureaucracy and corruption. Indians have a legitimate issue with the distribution of products as well. Although it is very cheap to transport on horse-drawn wheelbarrows or hand-pushed trollies, it is certainly not efficient and is prone to many more inefficiencies (however, I recognize that I may be underestimating the system’s abilities; did they not conduct distribution in America like this about a century ago and in China 20 years ago?).
However, he said that the rapid change in the attitude among Indians will force these issues to be resolved. Indians want to see its own progress; in fact, most Indian start-ups are funded by Indians, very few come to Wall Street for funds. He also addressed the impact of the middle-class. I clearly remember when I went to boarding school in India from 1994-5 how it was rare for a family to own a car; now it is a norm for families to have 2 cars! You would have to be in India to know how incredible that is!
He mentioned the Indian perspective and dispelled a few myths about it. Indians are not cheap; in fact, with the amount of money flowing to them from the West, there is clearly a vast and growing demand for luxury products (which, I argue, can be good or bad in the long-run). Also there are a few cultural perspective differences. It is also important to understand that just because Indians can speak English, does not mean they will think like Westerners. India takes its AIDs problem seriously and it is not uncommon to see condoms being advertised at metro stations, on billboards and daytime TV commercials. Topics like religion, politics, etc. which are considered taboo subjects here in the West are simply not considered so in India.
Anyways, that’s a summary for you all! Hope it was helpful.